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Understanding your credit rating

The credit rating is a judgment made by the credit-reporting agencies on repayment habits.This information helps determine someone’s level of risk for lenders in comparison to other consumers. The formula is straightforward: the more your repayment habits respect conditions and due dates, the better your credit rating will be.

Equifax and TransUnion are the main credit-reporting agencies in Canada.

Why is it important to maintain a good credit rating?


The credit rating defines the financial reputation  of a consumer. The higher the credit rating, the better the chance of obtaining credit from a financial institution or lender. Creditors use the credit report to decide on granting or refusing a loan and to set the interest rate. That is why the credit rating is crucial when the time comes to borrow major sums for such purchases as a house or car.

Conversely, a bad credit rating complicates the process to get a loan. A weak credit rating can also lead to indirect negative impacts, such as an inability to rent a dwelling. Fortunately, you can improve your credit rating by implementing certain measures. A Ginsberg Gingras professional can help you with this.

Everything you need to know about your credit report

The credit report is an overview of your credit history. All contracted loans, credit cards and financing you have obtained are included in your credit report. The credit rating is another piece of information included in your credit report.

  • A financial institution, before agreeing to give you a loan.
  • A business, prior to selling you something on credit.
  • A landlord, before renting you an apartment.
  • An employer, prior to hiring.
  • Yourself, to check the information contained.
  • Name, address and date of birth.
  • Work experience: name of employer, job title, length of employment, income.
  • Credit situation: late payments, unsettled debts, debt payment habits, available credit.
  • Information on your public financial operations related to: unpaid income tax, bankruptcies, judgements rendered against you.
  • The list of organizations and individuals that have asked for information about your solvency, including your credit rating.
  • The most common credit ratings are “R” ratings. These are often called the North American Standard Account Ratings. The “R” indicates that the item being described involves revolving credit, such as a credit card.
  • Other rating indicators that may be found in a report are “I” for instalment credit, such as a car loan, or “O” for an open credit line.
  • The best credit rating that can be granted is R1. Conversely, the worst credit rating to hold is R9.

Credit rating

  1. Too new to rate; approved but not used.
  2. Pays (or paid) within 30 days of payment due date or not over one payment past due.
  3. Pays (or paid) in more than 30 days from payment due date, but not more than 60 days, or not more than two payments past due.
  4. Pays (or paid) in more than 60 days from payment due date, but not more than 90 days, or not more than three payments past due.
  5. Paie (ou a payé) dans les 90 jours de la date d’échéance ou pas plus de 120 jours ou de quatre paiements en retard.
  1. Account is at least 120 days overdue, but is not yet rated “9.”.
  2. This rating does not exist.
  3. Making regular payments through a special arrangement to settle debts.
  4. Repossession (voluntary or involuntary return of merchandise).
  5. Bad debt; placed for collection; moved without giving a new address or bankruptcy.

Understanding the credit score

The Equifax and TransUnion credit-reporting agencies establish the credit score on a scale between 300 and 900 points. Good scores are those with high numbers. The higher the score, the less of a risk you represent to creditors.

Once a year, you can access your credit report and credit rating for free from Equifax and TransUnion. All you need to do is fill out a form found on the web site of either agency.

Make your payments on time. Obviously, this is the best way to improve or maintain your credit rating. However, if you cannot pay the complete amount, at least make the minimum payment. You can also try to make arrangements with your creditors. For more information about improving your credit rating, please contact the professionals at Ginsberg Gingras.

For some individuals, filing for bankruptcy is the best solution to settle their debts. But that obviously has implications on their credit rating. To learn more about the impacts, read our blog post “Your Credit Rating After Bankruptcy”.

How can we help you?


If you have any concerns about the impact of your debts on your credit rating, feel free to contact a Ginsberg Gingras professional. We can answer your questions and offer you solutions so you can regain your financial reputation.

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